CVS replaces its CEO — and the stock drops 7%
CVS Health (CVS) announced a change in its chief executive officer and cautioned that its upcoming earnings are likely to disappoint predictions from Wall Street, leading to a more than 7% drop in shares during early trading.
David Joyner has been appointed president and CEO and will assume the role on Oct. 17. He will be succeeding Karen Lynch.
Joyner, who has nearly four decades of experience in the health care sector, was previously the executive vice president and president of CVS Caremark. He has also held pivotal roles at Aetna, one of the company’s currently struggling divisions. Joyner will join the Board, while current chairman Roger Farah takes on the role of executive chairman.
“The Board believes this is the right time to make a change, and we are confident that David is the right person to lead our company for the benefit of all stakeholders, including customers, employees, patients, and shareholders,” said Farah.
The pharmacy giant has been trying to navigate a competitive pharmacy and healthcare landscape, particularly following its acquisition of Aetna in 2018. The integration was intended to streamline services and improve patient care, but operational inefficiencies and regulatory pressures have hindered progress.
In early October, CVS Health said it planned to eliminate around 2,900 jobs as part of a multiyear effort to save $2 billion. The initiative focuses on cutting costs while boosting investments in technology.
But these challenges have been exasperated by higher-than-expected medical costs and significant expenses related to premium deficiency reserves, prompting the company to revise its outlook for the third quarter. Due to these issues, investors should not rely on previous guidance, and further updates will be provided on the upcoming earnings call, CVS said.
Joyner’s deep understanding of CVS Health’s integrated business model is expected to address industry challenges and accelerate operational improvements. His leadership could be pivotal in transforming CVS Health into a more agile and responsive organization as it aims to meet evolving consumer needs.
In his first statement as CEO, Joyner emphasized his commitment to CVS’s Health mission: “There is no greater honor than to lead a company whose mission and purpose are completely focused on improving health.